Forty years after opening its doors - and less than two years after building a major new plant - housewares injection molder Laich Industries Corp. has filed for Chapter 11 protection from creditors.
The Brook Park, Ohio-based firm filed May 5 in U.S. Bankruptcy Court in Cleveland. In a May 12 news release, officials said increased Asian competition and significantly increased raw material costs are the primary factors that forced the filing.
In the filing, Laich listed debts of between $1 million and $10 million and assets valued in that same range. Its largest unsecured creditors are materials suppliers Entec Polymers LLC of Orlando, Fla. (owed $501,000), Matrix Polymers Ltd. in Northhampton England ($492,000), Huntsman Corp. in Salt Lake City ($247,000) and A. Schulman Inc. of Fairlawn, Ohio ($191,000).
``I never thought this would happen, not in 40 years of doing business,'' owner Walter Laich said in a May 12 phone interview. ``We lost quite a lot of business this year, and then two of our suppliers really came after us, so I thought we needed to file.''
Laich added that the firm had difficulty passing resin price increases onto its customers. Laich Industries has about 800 active accounts. Dollar General is one of its 10 largest customers, and the firm also does a lot of business with Marc's, a Cleveland-area discount retail chain.
During 2003, Laich Industries consolidated five Cleveland-area plants and a plant in Phoenix into a new, $13 million, 400,000-square-foot plant in Brook Park that opened in January 2004. The firm closed its only other plant - in Ottawa, Kan. - late last year.
Laich Industries operates 21 injection molding machines and employs about 100 in Brook Park. The firm makes plastic housewares such as resin furniture, dishpans and sink sets, as well as a line of sports novelty items. Its housewares are marketed under the Transco and American Value trade names, while its sports items are marketed as Sports Products. Most of the firm's products are made from polyethylene, polypropylene and other commodity resins.
Earlier this year, Walter Laich said that low-priced Asian competition had played a role in his firm losing 80 percent of its West Coast business since 1997. Laich also said at the time that the firm would focus on larger products such as tubs and resin furniture for markets in the Midwest and on the East Coast.
The privately held firm does not release sales figures, but Laich said the business posted a small loss in 2004 even though sales grew 1-2 percent.
Laich Industries will continue to operate during the bankruptcy, working with consulting firm Aurora Management Partners Inc. of Hickory, N.C., and Cleveland law firm Buckley King. Walter Laich said that if the situation improves - and steady resin prices so far in 2005 have helped - he hopes his firm can exit bankruptcy within a year.
``I want to turn this around and maintain production in Ohio,'' he said, adding he turned down a low-priced offer to buy his firm about six months ago.
Laich said in hindsight he should have consolidated operations and built the Brook Park plant about two or three years sooner. By the time he made the decision, markets were worsening and financing was more difficult to get because of numerous Wall Street scandals of the time.
Laich had been working as a mold and die maker in the Cleveland area when he opened his firm in 1965 as a custom molder of fan covers and similar items. His first proprietary product was a line of baseball helmets and he later expanded into housewares.
Assets listed in the bankruptcy filing don't include the Brook Park plant or the property it sits on. Both of those items are owned independently by Laich and his wife, Karin.
Laich Industries becomes the second sizable housewares maker to file for bankruptcy in 2005, joining Aero Plastics Inc. of Leominster, Mass. Aero made its filing Jan. 6, citing debts and assets each between $10 million and $50 million.